Globalization and Employment Outcomes in the Southern African Customs Union: A De Jure and De Facto Analysis

The primary objective of this study was to examine the impact of various dimensions of globalization on employment outcomes in the Southern African Customs Union (SACU) countries. A novel panel econometric approach was used, accounting for structural breaks, cross-sectional dependence, and heterogeneous slopes through cross-sectionally augmented panel-autoregressive distributed lag (ARDL) and dynamic common correlated effect (DCCE) estimation. The findings revealed that globalization, mainly through its economic and social dimensions, has induced additional employment capacity for the customs union. The prominence of de jure and de facto factors within this nexus was also confirmed. The results showed the benefits of foreign financial flows, tourism, technological knowledge spillovers, and trade facilitation in improving SACU labor market processes. Although the evidence here sheds light on the positive inducing effects, the presence of both adverse incorporation and skill-biased consequences was not discounted. Based on this, several recommendations are suggested. This includes the promotion of regional trade and greater integration within the wider sub-Saharan Africa (SSA), an industrial policy shift that promotes a more information and communication technology (ICT)-driven economy, developing industries without smokestacks (IWOSS), establishing sound regional institutions, and prioritizing export diversification, especially among the smaller states in the customs union. JEL Classification F63, F66, J2, R1